An amusing story set in the period 1920 to 1930. Interesting with amusing machinations coupled with the stock market crash.
Richard Whitney gave the impression of a model Yankee. He came from a family of early American settlers who had sailed from England in 1630. His father was a banker with longstanding ties to the House of Morgan. Thanks to his father's money and position in society, Richard received a brilliant education at the universities of Groton and Harvard.
And thanks to his own abilities in his youth was captain of baseball and soccer teams. At Harvard, he became interested in rowing and became treasurer of the rowing club. And he married very successfully to a girl from a wealthy family belonging to the Union League Club.
After graduation, Whitney bought a place on the New York Stock Exchange, and founded in 1917 the firm "Richard Whitney and Company". Despite his youth he was treated with respect at the stock exchange. Richard's older brother George was married to the elder Morgan's daughter and was considered a partner in the most famous family of bankers. He constantly helped his younger brother. As a result, the younger brother gained a reputation on the stock exchange as a "Morgan broker".
However, behind the reputation of an honest broker and a model Yankee there was another side of Whitney's nature. He was, in fact, a gambler. And since stock exchange activity is also a kind of game, he gambled in risky financial transactions. And he often lost.
At that time, "bulls", i.e. brokers who played on the upside, were favored on the stock exchange. If you invested well, you could make a fortune on a single transaction. Whitney also decided to play for a big raise. He borrowed $750,000 from his brother and bought shares in the company producing fertilizers from sludge and the company for the extraction of mineral colloids. However, these shares were not only not growing in value, but on the contrary, they were falling. Richard lost. However, like any drunken gambler, he did not lose hope to win back. And began to get deeper and deeper into debt. Whitney put securities from his father-in-law's inheritance into circulation. Then he mortgaged his East Side mansion for $110,000. He borrowed several more times from his brother. However, Fortune did not want to turn to Whitney face. In fact, the game on the stock market brought him only losses. By early 1929, his debts amounted to a very impressive amount - about two million dollars. However, it remained a mystery, outwardly Richard was doing well, and therefore he was elected vice president of the New York Stock Exchange.
And then the financial crisis hit the United States. Which unexpectedly raised Richard Whitney to new heights. 1929 was a tragic year for many American businessmen. They went bankrupt, stocks turned into mere paper, a wave of bankruptcies swept across the country. Several major financiers committed suicide. The stock market was plummeting. There was chaos and panic on the New York Stock Exchange. But fortunately, on September 24, 1929, a "Black Thursday" for the stock exchange, it had its own hero who stopped its collapse.
The president of the New York Stock Exchange, the elderly Simmons turned out to be a farsighted financier, before the crisis, he managed to dump most of his shares, and therefore, when the stock market collapsed, was enjoying life during his honeymoon with his young wife in Hawaii. The vice president of the stock exchange Whitney was left to fend for him on Wall Street. And Richard did not fail. Having secured the support of bankers, Whitney appeared on the trading floor at the most important moment, and with a nonchalant look began to buy shares, while everyone else was trying to sell them. The panic on the trading floor was replaced by amazement. All the brokers froze, watching Richard, businesslike and nonchalant, buying large blocks of "blue chips".
It is said that Whitney that day, in agreement with a consortium of banks spent a huge sum of 250 million dollars to buy shares. But by doing so, he prevented the collapse of the stock exchange. Its work resumed and stabilized. And Richard Whitney became a national celebrity. About him enthusiastically wrote all the newspapers and magazines of America. On the wave of popularity in 1930, he was elected president of the New York Stock Exchange. As a financial luminary, Whitney was invited to the White House to U.S. President Hoover.
You have to give Richard Whitney credit. As president of the world's largest stock exchange, he kept it afloat during the most difficult years of the Great Depression. However, defending the interests of financiers, he criticized the course of the new U.S. president, Franklin Roosevelt, on state regulation of the market. And, as a consequence, in 1935 he lost his post as head of the stock exchange, but remained on its board of directors.
Richard Whitney seemed to be enjoying life. He led a luxurious life, spent time in the most expensive clubs in America, drove 8 cars, had 48 suits and a magnificent collection of wines. However, the cost of a beautiful life and the maintenance of a huge staff of servants in his mansion Fa Hills in New Jersey required a lot of money. And in the game on the stock market, he was still unlucky.
After the abolition of Prohibition, he invested 225 thousand dollars in the production of apple vodka "Jersey laiting", apple moonshine, which was clandestinely made by bootleggers during the prohibition of alcohol in the country. However, during the period of alcohol legalization, Americans did not want to drink moonshine. The project with "Jersey Lighting" Richard failed and brought him only losses. To cover them, Whitney stole and pledged the bonds of the New York Yacht Club, of which he was president. In fact, he was already on a downward slope, and new investments only increased his debts.
By 1937, the financial luminary of America and the genius of the stock market game already owed banks about 5 million dollars and 1.25 million - his brother George. But he couldn't stop. Richard borrowed money from everyone he knew and lost it on the stock exchange. Then he went from loans to outright scams.
Whitney stole 1 million dollars from the Exchange's Gratuity fund, the chairman of which he was a member. However, a vigilant auditor of the fund discovered that the money was missing. An investigation was launched. Dozens of Whitney's creditors filed applications against him with the Commission for Combating Exchange Fraud. It turned out that Richard, who once headed this commission and heard the implacable fighter against these very frauds, and is - the biggest fraudster in the history of the New York Stock Exchange. It turned out that he not only stole money from the fund, but also cleaned out the accounts of many of his clients. And the debts of his company, Richard Whitney & Company, amounted to 30 million dollars.
As a result, Richard Whitney was charged with grand larceny, fraud, and stealing money from the yacht club and his father-in-law. They resulted in a court verdict of five years in Sing Sing Prison.
On April 12, 1938, more than 6 thousand people gathered at New York Central Station to see with their own eyes how the "stock exchange king" would be led in handcuffs. The exposure of Richard Whitney became in America not just a sensation, but a symbol of the impurity of the rich capitalists.
And although Richard did not have much trouble in prison - he played baseball and ate lunch on schedule, he probably had a lot of hiccups when his name was mentioned in vain. And he was mentioned a lot.
For example, once a judge in St. Louis, before sentencing a young man who stole two dollars from a gas station, recalled the story of the "stock king":
- Mr. Whitney stole two hundred and twenty-five thousand dollars from his yacht club and father-in-law and got five years. That means forty-five thousand dollars a year and one hundred and twenty a day. The guy stole two dollars, therefore I sentence him to twenty-four minutes in jail.
